Inside MEA

Microgrids and Resiliency in Maryland

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On June 23, 2014, the Resiliency Through Microgrids Task Force Report was released, charting a path forward for microgrid deployment in Maryland. Microgrid technology combines clean, distributed power generation with advanced control equipment, enabling portions of the electric grid to remain online even if the wider grid is down. The report is the result of four roundtable meetings with representatives from sister states, project developers, utilities, and non-profit think tanks, as well as ratepayer advocates, legal thought leaders, and others. The Task Force began with the hypothesis that microgrids serving individual customers in a campus style setting are now practicable in Maryland and looked to technology and regulatory solutions that can serve several customers across multiple properties. Additionally, this effort looked to develop public purpose microgrid policies as part of a long-range, holistic vision for the state.

The Task Force makes several important recommendations in the report. First, the Task Force recommends that Maryland pursue public purpose microgrids in the short term, for uninterrupted electric service to critical community assets such as community centers, commercial hubs, and emergency service complies. This will provide widespread public benefits when the regional grid is down. The Task Force also concludes that utility-owned and operated microgrids are in the policy interest of Maryland are practical under current law, which supports development and further regulatory approval. Moreover, the Task Force provides sample policy outlines to potentially authorize third party public purpose microgrids, operated by local governments and private developers, with an eye towards spurring innovation and ensuring consumer protection. Finally, the Task Force recommends that the State create a new Grid Transformation Program to help facilitate these recommendations and run three new grant programs for public purpose microgrid projects, advanced controls, and energy storage.

Summary of Key Conclusions and Recommendations

The outline below summarizes the key conclusions and recommendations of the Maryland Resiliency Through Microgrids Task Force. The page numbers reference the locations in the report in which the conclusions and recommendations appear.

Public purpose microgrids have the potential to offer important societal benefits during periods when the macrogrid is down, while allowing for the economic and innovative integration of distributed generation and energy storage systems during normal operations (page7).

Utilities should incorporate public purpose microgrids, with accompanying distributed generation and energy storage systems, into their existing grid upgrade planning processes and local governments and emergency planners should coordinate with public purpose microgrid operators to determine how such systems will be utilized during emergencies (page 21).

The State should develop incentives that support the deployment of public purpose microgrids, advanced controls, and energy storage systems as part of a new Grid Transformation Program (page 22 ).

The States microgrid deployment efforts must utilize existing EmPOWER Maryland energy efficiency incentives as a means to reduce the distributed generation required to meet local load (page 24).

The continued deployment of distributed generation will have significant impacts on the grid. The State should analyze and reform the current energy paradigm to allow for the successful integration of microgrids and distributed generation while maximizing social benefits. (page 17)

The Maryland Energy Administration, in consultation with the Public Service Commission, should conduct the following three studies.

A review of interconnection procedures for distributed generation and microgrids, with the goal of ensuring safe interconnection with the macrogrid while enabling island and smart control technologies, reducing soft costs, and expediting adoption (page 17);

A tariff study examining a methodology to value distributed generation and microgrids to the macrogrid and society (page 18); and

A plan outlining an appropriate process for electric distribution companies to provide project developers with information identifying the most valuable locations for distributed generation and public purpose microgrid deployment (page 19).

It is in the policy interest of the State to pursue utility-owned public purpose microgrids that serve multiple customers over multiple properties. The State should focus on the deployment of these microgrids in the short term (page 26).

Current law authorizes the PSC to require or allow utilities to construct, own and operate microgrids subject to appropriate cost recovery (page 29).

Under current Maryland law:

The Public Service Commission is authorized to require to allow electric distribution companies to construct and operate distributed generation facilities to meet long-term, anticipated demand in the State for electricity supply (page 30);

After Public Service Commission approval, electric distribution companies can assess a Microgrid Service Charge through a PSC-approved rider on microgrid customers (page); and

Electric distribution companies can make a legitimate argument to include a portion of public purpose microgrid costs in the rate base (page).

Electric distribution companies should facilitate the deployment of public purpose microgrids by filing applications for project preapproval with the Public Service Commission (page 36).

Long Term: Third Party-Owned, Multiple Customer Public Purpose Microgrids Across Multiple Properties

If done through an appropriate legal framework, authorizing competition for the provision of public purpose microgrid services to multiple customers across multiple properties has the potential to enhance grid resiliency and spur innovation. The State should take a long run approach to the authorization of these systems, with broad public debate (page 27).

Third party owned and operated microgrids are not feasible under current Maryland law (page).

In order to allow for increased resiliency and enhanced economic opportunities, the State may consider authorizing public purpose NAMs that utilize entirely new, non-electric distribution company distribution assets (page 43).
ii. The Task Force believes the following sample legal framework is an appropriate starting point for future public

The Task Force believes the following sample legal framework is an appropriate starting point for future public discussion and debate:

The Public Service Commission should have authority to grant limited authorization to NAMs to serve specific customers in predefined boundaries within existing EDC franchise areas (page 45).

The Public Service Commission should be authorized to establish a NAM tariff that incorporates the value of the EDC distribution grid, while creating a process to factor in the value a NAM may provide to the electric distribution companys distribution system (page 51).

All NAMs should satisfy a statutory definition of public purpose microgrid that includes a requirement to serve critical community assets, the ability to island, and a cap on maximum load served (page 52).

NAMs with small loads should be exempt from Public Service Commission rate regulation, regardless of system ownership or control (page 52).

All NAMs up to the maximum load cap that are owned by the State or local governments should be exempt from Public Service Commission rate regulation (page 53).

All other NAMs above the small load exemption and up to the maximum load cap should only be exempt from Public Service Commission rate regulation upon a determination by the Public Service Commission prior to project construction that the NAM does not present a substantial likelihood of operating against the interests of any particular customer class (page 53).

Customers of all NAMs, as well as the Office of Peoples Counsel, on behalf of such customers, should have the right to petition the Public Service Commission to investigate whether a NAM is operating in the interest of its customers (page 55).

Recognizing the majority of potential microgrid customers are served by existing electric distribution company assets, the State may consider authorizing LMOs that provide microgrid services on top of and not in place of existing electric distribution company assets (page 56)

The Task Force believes the following sample legal framework is an appropriate starting point for future public discussion and debate:

Under this model, an LMO would not own distribution assets (i.e., the wires) and the electric distribution company would remain eligible to recover all applicable costs from ratepayers who are also served by the LMO (page 56).

LMOs should be authorized to own and/or contract for generation, storage, and control systems, and could operate as the electricity supplier for microgrid customers (page 56).

LMOs should have the ability to assess a Microgrid Service Charge from microgrid customers through existing utility billing systems, similar to competitive suppliers (page 57).

LMO developers should be required to seek project approval from the Public Service Commission through a mechanism similar to the existing Certificate of Public Convenience and Necessity process (page 58).

LMOs should meet licensing and consumer protection requirements similar to those applicable to competitive electricity suppliers (page 59).